Impact of emigration on labour supply in domestic labour market

Following Poland’s accession to the European Union, the effects of mass emigration by Polish workers are increasingly felt in the Polish labour market. In a study on ‘Worker migration – opportunities or threats’ published in 2007, more than half of the employers surveyed stated that they had lost employees who chose to pursue careers abroad. The most serious labour shortages are among manufacturing personnel and qualified technical staff.

One of the most significant effects of the opening of national borders resulting from Poland’s accession to the EU in 2004 is the migration of Polish workers. According to some estimates, two million Poles have left the country to seek work in other EU Member States.

Nonetheless, the data presented in the Institute of Public Affairs (Instytut Spraw Publicznych, ISP) report, entitled [Social and demographic analysis of economic migration of Poles to EEA countries after 1 May 2004 (in Polish, 453Kb PDF)](http://www.msz.gov.pl/files/docs/DKiP/ekspertyza-isp-finalny 24 04 07.pdf), appears to be more accurate. The report estimates the country’s rate of emigration to be between 800,000 and 900,000 people every year. Whether these figures are accurate of not, it is clear that the scale of this phenomenon has left some sectors of the Polish economy suffering from a workforce deficit.

About the study

The increasing problem of labour shortages has become the subject of several recent analyses. In 2007, the international consultancy KPMG published a report, entitled Migration of workers – a chance or a threat? (in Polish, 855Kb PDF), which examines the effects of large-scale migration on companies operating in Poland. The KPMG survey comprised 104 enterprises employing more than 250 workers. Replies to its questionnaire were solicited from the companies’ directors and human resource (HR) managers.

One of the main issues explored in this survey related to the extent of migration and its impact on the country’s labour market; directors and HR managers were asked to answer the following questions: ‘to what extent has the phenomenon of economic migration affected companies, and what is its actual impact on the job market and on the operation of business enterprises?’.

Workforce deficit

According to the KMPG report, more than half of the companies (52%) surveyed are currently facing problems in recruiting the workers they need. This problem is particularly acute for companies in the manufacturing sector. The report’s authors emphasise that the problem basically results from two concurrently occurring circumstances: there is a shortage of appropriately qualified workers willing to take up job offers, while those who are employed often give notice that they want to leave their current jobs in order to migrate abroad.

The decision to leave a job to search for a better one with a greater career potential is more often taken up by skilled specialists. Almost 60% of the responding companies have experienced a situation where workers serve notice in order to leave the country. Once this situation occurs, many of the companies affected (72%) find it difficult to recruit new employees for substituting those who leave the company.

Employers suffer the most from a shortage of skilled labour – that is, holders of third-level degrees (58% of the responses) and specialist degrees awarded by secondary schools (50%). Meanwhile, the lack of unskilled workers does not yet seem to be an acute problem for the companies surveyed.

In terms of occupational categories, employers are seeking to a great extent technical personnel. Workers from this group enjoy a relatively strong position in the Polish labour market and, accordingly, often demand employment conditions which employers are unable to meet. Every third responding company (35%) had experienced at least one recruitment situation where a person declined a job offer from the company, because they preferred to look for work in another country.

Measures to improve employment conditions

The research suggests that, when dealing with an employee who is considering relocation to another country, Polish employers’ position is too weak to retain the worker. Less than half of the employers (42%) whose job offers lost out to those made by foreign companies endeavoured to convince the employee that they should stay with them.

Measures taken by Polish companies to limit the negative effects of the brain drain and to attract new employees include direct pay increases, as well as expanded benefit packages, offered by 60% and 54% of the companies surveyed, respectively.

High praise has been expressed for measures taken in relation to manager training improving their capacity to better motivate employees, foster an effective workplace environment and enhance job satisfaction of their subordinates, through performance-related pay, for example.

Companies eager to recruit returning workers

The companies participating in the study stated that they would be happy to hire workers who have gained work experience abroad; they perceive the openness to new experiences as one of the strengths of these workers (72% of responses). Companies also believe that these workers learn faster and generally follow a more customer-oriented approach in their work.

Commentary

The KPMG research on workers’ migration illustrates the gradual transformation of the Polish labour market from an ‘employers’ market’ to an ‘employees’ market’. It should be kept in mind, however, that the study findings describe a certain reality from the perspective of employing companies. These findings do not take into account the experience of large numbers of migrants with relatively short employment histories who are working in low-skilled jobs and, as the ISP report indicates, the typical economic migrant from Poland fits this description. Unfortunately, a shortage of this category of workers – candidates for ‘low-quality’ jobs – is looming in the Polish labour market. Specialised workers are gradually returning to Poland, being attracted by ever-higher earnings and a strong Polish złoty compared with other currencies. The fact that skilled workers are returning to Poland is already evident in sectors such as construction and information technology.

Rafał Towalski, Institute of Public Affairs